This Pound Sterling report discusses the impact of the leaked Government document and looks ahead at some of the factors that could affect GBP exchange rates this week. The table below contains the movement for a number of GBP currency pairs and the difference when converting £200,000 during the last month:
|Currency Pair||% Change||Difference on £200,000|
The Pound came under pressure early yesterday, with GBP/EUR falling once again from the 8 month high seen only last week. This was following on from a leaked Government report suggesting that the UK will be worse off after Brexit in all three Brexit scenarios: a free trade agreement, access to the single market, or if no deal is reached.
The leaked document was released by BuzzFeed News, however Theresa May’s spokesperson said that this was only a preliminary assessment which hadn’t taken into consideration the potential for a bespoke agreement with the EU.
The report focussed on UK growth over the next 15 years, and suggested that if a free trade agreement was reached, growth would be 5% lower in this time. If single market access was agreed it would be 2% lower, and if no deal was struck causing the UK to follow World Trade Organization rules, growth would be 8% lower.
Mortgage approvals data was released yesterday and was another dampener to Sterling exchange rates, hitting the lowest number of approvals in almost three years. Homeowners and prospective buyers are clearly feeling the pinch after the Bank of England raised Interest Rates in November last year, and isn’t likely to improve with another rate hike expected this year. Consumer Lending figures were higher in December than the previous month, and bolsters the view that wage growth isn’t keeping up with the current levels of inflation, pushing consumers into debt.
However, we did see a slight spike for GBP/EUR rates following from Bank of England Governor Mark Carney’s speech yesterday afternoon. He indicated that he expects Inflation to remain above the 2% target, which is key to deciding future monetary policy, and that he expects UK business investment to increase again once Brexit uncertainties are resolved.
Clients with a short term Sterling transfer requirement should keep a close eye on European Inflation data released at 10am today, as if this release is negative as expected we could see GBP/EUR move back above 1.15. Other releases to note this week include UK Manufacturing data on Thursday morning, and on Friday Construction data which are all likely to impact the value of the Pound. Registering with us can allow us to alert you when a rate becomes available, a tool which is proven to be invaluable to our clients.
For further information on how upcoming events could affect exchange rates call our currency brokers today on 01494 725 353.
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